Renewables:

What are the trends in the Midwest solar and wind energy supply chain? During today's OnPoint, Howard Learner, executive director at the Environmental Law and Policy Center, discusses a new series of reports highlighting developments in the wind and solar energy industries in Midwestern states. Learner says that, despite the recession, these industries have continued to grow and create jobs.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Howard Learner, Executive Director of the Environmental Law and Policy Center. Howard, it's great to have you back on the show.

Howard Learner: Good to join you.

Monica Trauzzi: Howard, ELPC recently produced a series of reports about the solar and wind energy supply chain in the Midwest. What did you find is the trend among manufacturers?

Howard Learner: You know, what we found happening is while there's the partisan divide in Washington, in places like Ohio and Michigan and Illinois and Iowa businesses are making solar equipment and wind equipment. People are in the field installing it on the ground. Clean energy is moving forward. Could it move forward faster? Absolutely, but there are 121 companies in the solar supply chain in Michigan. There are 120 companies in the wind supply chain in Michigan. There's more than 10,000 jobs of people in the clean energy business and this is moving forward. The same is true in Ohio. The same is true in Illinois. Iowa is a little bit smaller state, but there's six major wind equipment manufacturers in Iowa and a lot of businesses in the supply chain. This is jobs, it's economic growth and it's clean energy that's moving forward on the ground while the political debate is going on in Washington.

Monica Trauzzi: What we've heard is because of the recession, a lot of the renewable energy development has slowed down. Did you find something different with this report?

Howard Learner: You know, some of it has slowed down, others has accelerated. More than 30 states have renewable energy standards and while we hope for congressional action, while Congress is somewhat stalled and Chairman Bingaman is trying very hard to move something forward and we commend him, but 30 states are moving forward with renewable energy standards and they're all self-ratcheting. The way they work is they increase every year. In Illinois for example, it's 5 percent by 2010, 10 percent by 2015, 25 percent by 2025. And as that keeps ratcheting up, and most of the states operate on that model, you see more and more projects going forward. Are there some that get installed? Of course there are. But beneath the news stories of the one or two or three or four that gets stalled are the 8, 9, 10, 11 or 12 that are going forward. And that's putting people to work. That's creating economic growth in rural areas and it's creating manufacturing jobs of people who make -- you know, skilled workers with technical skills who are making equipment in Ohio and Michigan, Indiana and Illinois and that's a good story.

Monica Trauzzi: There's a lot of talk right now about revamping the tax code. And one of the things that will be looked at are the tax credits the renewable energy industry receives. How reliant, from where you sit and the research that you did, is the renewable energy industry on those tax credits?

Howard Learner: Absolutely, the tax credits are important to both the solar industry and the wind industry. And that part of the renewable energy industry would change significant without the tax credits, whether it's 1603 or the production tax credit or the manufacturing tax credits. But you can't just pull that apart from the renewable energy industry. You know, presumably if one really did a Cato Institute sort of get rid of all the tax policy and took it out on coal and took it out on oil and gas as well as wind and solar. You know, zero fuel cost, wind power and solar power will do pretty well. So you can't just cherry pick and say get rid of it for the wind industry or get rid of it for the solar industry. And, indeed, these are the industries of the future. Clean energy development is the fastest-growing part of the world economy, especially in the energy sector and we want to invest in America's future. We want America to be a leader and we want to be using our old-line manufacturing companies in the rust belt to manufacture the equipment for the new clean energy economy that's going forward. No knock on China, but we want that to come from America.

Monica Trauzzi: We can't talk about renewables without talking about transmission.

Howard Learner: That's correct.

Monica Trauzzi: What have you found regarding transmission and the progress that we're seeing on that?

Howard Learner: You know, transmission is hard. We all know that. There has been some good movement by FERC and by the RTOs to try to identify high-priority transmission projects and use those to move power from one part of a region to another. So, for example, where I come from in the Midwest and Great Plains, states like Iowa, North Dakota and South Dakota, Kansas, tremendous wind resources. The load centers of course are in the Chicagos and the Milwaukees, the Detroits and the Clevelands. So you need to move that power with transmission from the Plains to the central Midwest. On the other hand, there is a fair amount of wind power in Illinois and Indiana and Michigan and Ohio. There's a 50 megawatt solar project going up on an abandoned strip mine in Ohio. I mean and that's a great story, that's serious power moving forward. It's about 160 solar panels. So what we need to do is tap the resources where we have them and then also look at transmission, whether it's on the eastern seaboard or on the Great Plains going to the central Midwest to facilitate more growth.

Monica Trauzzi: Are renewables still considered an attractive investment for the private sector?

Howard Learner: Many consider it very attractive, because if you can get a PPA for a wind project you have virtually no risk going forward. The fuel cost is zero, so you don't have the volatility of pricing you could have on gas or on coal. A PPA locks in a predictable revenue stream going forward and, frankly, there aren't many things that can happen to a wind project over 5, 10, or 20 years that would undermine the investment and the sort of peculiar thing, being in a tornado or something, can be insured against. So a wind project with zero fuel costs and a PPA for 10 or 15 or 20 years is not as difficult to finance as many, many other projects, because they have more risk. Think about a coal plant or a nuclear plant going forward. The risks on a nuclear plant are astronomical. With regard to a coal plant, there's massive uncertainty right now. What will be the status of the NOX regulations or sulfur dioxide when and if the greenhouse gas rules and standards kick in? What's going to happen on the air toxics rule? On a wind project, once that project is installed, the fuel costs are zero and the regulatory risk is almost zero.

Monica Trauzzi: Are there still societal barriers in the United States that are getting in the way of the expansion of renewables or have we overcome most of those?

Howard Learner: You know, I think we've largely overcome them, in that wind power and solar power are widely viewed as popular by the public. People like it. It's new technology. It's innovative. We want to lead the world on the new clean technology and particularly when you look at a younger generation, you know their support for solar and wind power is off the charts. Now, you read from time to time about a project that's controversial, Cape Wind for example. But you read about Cape Wind, what you don't read about are the three or four or five other projects that are moving forward. You know, think about your news stories. Cape Wind is a good news story. The story of the project that 200 megawatts is going forward, the farmers like the income they're getting, the rural community likes the tax revenues that are coming forward, environmentalists like the clean power going in, it's well-financed. News it six? Not really. So that's happening, it's moving forward with tremendous public support. Indeed, the interesting thing about polling data is people believe that their utilities are supplying them with much more wind power and solar power than they're actually getting. And when people find out the modest percentage with most utilities, they're usually perplexed and angry.

Monica Trauzzi: All right.

Howard Learner: We can do better.

Monica Trauzzi: We're going to end it right there on that note. Thank you for coming on the show. Nice to see you.

Howard Learner: You're welcome, good to join you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.